By JANE HOUIN
Ohio Correspondent MARION, Ohio — Corn growers have heard the call to produce for feed, food, fuel and export markets, and Ohio corn growers are part of that trend.
According to the USDA acreage report, estimates put U.S. corn acreage at 92.88 million acres. And the Ohio Corn Growers Assoc. reports that Ohio has increased to more than 4 million acres, up from 3.15 million acres last year.
“Ohio farmers have responded to market needs,” said OCGA Executive Director Dwayne Siekman.
Tim Dixon, general manager at L.E. Sommer & Sons of Seville, Ohio, handles grain merchandising for his company and agrees that price is the primary factor driving corn acreage higher, but cautions that despite a probable strong corn market in the foreseeable future, the grain market is still more volatile than was present even a few years ago as a result of the number of speculators trading in grain futures.
“There will be significant ups and downs regardless of the long-term trend,” Dixon said. “With that said, I feel the long-term trend is certainly steady and more than likely up. With the ever increasing ethanol demand plus an already strong non-ethanol demand for corn, I just don’t see how we can produce enough corn to start a downward price trend anytime soon.”
The USDA has also released its quarterly grain and oilseed stock estimates, which at 3.55 billion bushels of corn were also higher than expected.
Demand is strong in all corn sectors said NCGA board member Bob Dickey, a producer from Laurel, Neb.
“Growers across the country are showing that we’re committed to supply all market sectors,” Dickey said. “The market sent growers a signal to plant more corn, and we responded in a big way.”
Ironically, despite the increase in corn numbers this year, corn may not end up being the most profitable crop for farmers per acre at the end of the growing season.
“Things are never quite what they appear,” cautions Dixon. “Don’t ever assume a big rally in price like we saw through spring is going to become the ‘norm.’ Things change so quickly. The highs usually go too high and the lows usually go too low, and there is typically an adjustment. Now is a perfect example.”
Dixon said back on Nov. 15 when the corn rally had a full head of steam, the Chicago Board of Trade (CBOT) had November 2007 beans trading at 204 percent of December 2007 corn. The rule of thumb for beans to return to a similar net per acre as corn is for beans to trade at 250 percent of the price of corn.
“With that kind of ratio going into spring planting, it was a no-brainer for farmers to favor corn,” Dixon said. “The corn acres went up and the bean acres went down, and combined with other market influences, that ratio has turned around to where today, CBOT November 2007 beans are trading for 258 percent of CBOT December 2007 corn. Therefore, even with all the hoopla over corn, at present, this ratio actually favors beans for the best net per acre.”
Dixon said that while the factors affecting commodity prices are many and complex, the corn price and acreages may have ripple effect of other commodities as well.
“One of the major factors for determining the price of any commodity is the acres planted to that particular commodity,” Dixon said. “With corn at such high prices when this year’s planting decisions were being made and the resulting increased acres planted to corn, it reduced the available acres for other commodities and thus the supply of those other commodities. This year and for at least several years to come, there was and will be a battle for which commodities get the acres.”
Weather problems had threatened some areas during planting season, but the acreage report shows crop development on or ahead of schedule in most areas.
“Weather is always a concern,” said NCGA Production and Stewardship Action Team Chairman Bill Chase. “But with good weather and the large numbers of acres planted this year, we should see record production.”
Dixon said it is still too early to tell how Ohio’s dry weather conditions this summer will affect the corn crop.
“Although we have had plenty of reason for concern over weather this spring and early summer, we still seem to have a good chance for trend line yields,” Dixon said. “However, that can change quickly. Obviously, drought is the big fear this year. If dry weather persists through pollination and beyond, we will see a significant impact on yield and then price (going up).”
Mike Molnar, agronomist at L.E. Sommer & Sons in Seville, Ohio, agrees with Dixon’s assessment.
“We haven’t had a lot of rain, but what we have has been timely – at least in this area,” Molnar said. “Farther west is looks a little worse, and the beans are not faring as well.
But overall, around here, I think the corn looks pretty good.”
The shift to corn was felt nationwide, according to USDA. The report shows that the number of acres planted to corn increased in 42 states. Growth was especially strong in the South and Midwest.
The acreage report also shows that the nation’s farmers continued to embrace biotechnology. Corn growers planted 73 percent of their acres with biotech seed, an increase of 12 percent from 2006.
“There is definitely an increase (in biotech corn), but not as much over here as farther west in Indiana,” Molnar said. “I think it’s just because you don’t have to rely on chemicals as much and the yield advantage is there.”
The trend to planting more corn acres is more likely to attract row crop farmers as opposed to farmers with livestock like dairies, just because the dairy farmers are still going to need their hay, Molnar said.
In the short term, farmers can continue to follow the same practices they always have when it comes to planting more corn. But if the trend continues long term, growers may have to look at and make changes in their production program, Molnar said. This farm news was published in the July 18, 2007 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee. |
